Tuesday tips round-up: G4S, IMI, Hiscox

Security firm G4S reported organic growth, which excludes the impact of acquisitions, down slightly to 4.2pc for the first nine months of the year, compared with 4.8pc in the first half. This is still a good result considering the current climate. They still look good value at around 12 times next year's earnings. This is slightly below European peer Securitas, and G4S arguably has a better strategy. This is a defensive stock that looks good in both a down and upturn. A solid buy for these uncertain times, thinks the Telegraph.
The Independent agrees. We would be backers of the shares, it says. The equity markets have had a good run in recent months, but there are concerns that some gains have been a little too enthusiastic. Those that have held G4S over the last 12 months can only be pleased with the way the group has performed. We would predict that the next 12 months will be equally fruitful. Buy, it says.

IMI, which supplies hydraulic controls for trains, is running ahead of time. Yesterday's year-end trading update was released more than a week ahead of schedule. More important, the FTSE 250 engineering conglomerate said that current-year profits would be "materially ahead" of forecasts. On raised 2010 earnings forecasts, the shares still trade on only 11 times next year's numbers, not dear given the scope for further upgrades. The 4.2 per cent prospective dividend yield also appeals. Hold on, recommends the Times.

IMI is looking like a solid recovery play, says the Telegraph. Some analysts in the City say that their 2010 estimates remain on the conservative side due to potential headwinds in IMI's so-called later cycle businesses. A lot depends on the speed of recovery of construction in the private sector. The shares are yielding around 4.5pc and we think that they offer good value. Buy, says the Telegraph.

It will take more than Hurricane Ida - which was downgraded yesterday to a tropical storm - to blow Hiscox off course. Yesterday's trading update from the second-largest quoted Lloyd's of London insurer showed that it was on track to report a doubling of pre-tax profits in 2009. Hiscox's attraction is that it has a strong capital base. But the problem is that, at 338p, up 10p, or a 29 per cent premium to Numis Securities' forecast of net tangible assets, Hiscox is a discovered jewel. Even so, the Times says 'hold'.

Inmarsat provides voice and high speed data services to "almost" anywhere on the planet - the polar regions are the exception - whether on land, sea or in the air. The group owns 11 satellites in orbit and sells its services through global partners, and is doing pretty well for it. The group put out third-quarter numbers yesterday, which beat analyst expectations. But it is on a price-to-earnings ratio of 28.7 times consensus for this year's numbers, ahead of its peers, so hold for now, thinks the Independent.

For most of this decade, there has been a single powerful reason to hold shares in TT Electronics. The small-cap components supplier, best known as a maker of automotive sensors, doled out a 10.1p-a-share dividend - giving a near-double-digit yield for most of that time. But its dividend has disappeared and shows no imminent sign of return. At 70p, or 23 times next year's forecast earnings, TT's recovery is already assumed. Await further progress before buying, says the Times.

Finance director Deena Mattar cannot explain the performance of Kier's shares. The construction group issued a trading statement yesterday, saying 2010 should be a cracker. The shares are nonetheless feeble. According to analysts at Investec, the stock, "on a conservative sum-of-the-parts basis, in our view, offers over 100 per cent potential upside". We like Kier, but these factors do temper our urge to buy. Hold and see how the next 12 months pans out, says the Independent.


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